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A task I was given by the two brothers who founded the company after taking over the presidency from them in 1999 was how to dispose of the shares they held. Since that time, Nomura had suggested we carry out an MBO. However, I, who was in charge of the company's OTC registration when the company went public, was in fact disinclined to carry one out due to the considerable work involved in delisting once a company has taken the trouble to go public. After reconsidering the matter, I felt that the collapse of the IT bubble and the ensuing sharp decline in earnings provided a prime opportunity to carry out the MBO.
When we reached the point where our sales halved in fiscal 2001, which ended April 2002, I felt that there was a critical need for us to promptly implement drastic structural reforms for the company to survive over the next 20-30 years. Such reforms would, of course, include raising the added value of our products and restructuring the business, as well as performing a thorough review of our markets and the pursuit of application possibilities for our technologies.
To execute these drastic reforms, we needed to further close ranks. In addition, we could not promise our shareholders that we would grow as rapidly as we had prior to the collapse of the IT bubble. As we could not meet that obligation in the foreseeable future, we wanted to at least somehow show our gratitude for the support our shareholders had given us to date.
We held more than 10 meetings with NPF staff to reach an understanding prior to making a decision on the MBO and, as for setting the tender offer price, I believe we were able to agree on a price that took into account my consideration for our shareholders. Thanks to NPF's support, we were able to execute the tender offer and distribute the company shares among the management team once we had made our decision. Presently, we are vigorously pushing our managerial reforms forward with an aim to making a great leap towards our next objective as we originally intended.
I was concerned about how the MBO would be interpreted by our clients and employees, all the more as it was still a new method in Japan at the time. However, some of my fellow managers in fact praised me for executing the MBO, with one saying, "You had a lot of courage to take such a risk. If possible, I'd like to carry one out too." Even so, some voiced concern about my action, with one individual asking, "As we are an excellent company without any bank loans, isn't there another way?" To these individuals, I would like to express the significance of my action through the success of our management reforms.
Once we had decided to carry out the MBO, I could rest assured knowing that Nomura had a proven track record in carrying out MBOs, as well as tender offers of course, and was taking care of all of the required procedures. Although unexpected problems inevitably arise when executing an MBO, we were able to steadily resolve them through constant dialogue with Nomura.
In November 2002, we got off to a new start after merging with a special purpose company that will take over our stock. A virtual consensus has been reached among the relevant parties over specific management issues and the prioritization of objectives via discussions held at management conferences. NPF has already provided us with a wide variety of information and referred us to a Nomura Group consultant. However, since the actual implementation of our management reforms, which is the true aim of our MBO, is due to take place in the future, we look forward to continued receipt of appropriate advice on selected management issues and support for the execution of the related reforms from the Nomura Group.
